Question

36 months ago, you borrowed $30,000 from your local credit union on a 60 month car loan at an interest rate of 3.2%. You have made your monthly payments right on time but you now want to pay off this car and buy a new one. How much do you still owe on this car?

A.There is not enough information to figure this one out!

B. $12,577.97

C. $12,545.65

D. $14,985.32

Answer 1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

30000= Cash Flow*((1-(1+ 3.2/1200)^(-5*12))/(3.2/1200))

Cash Flow = 541.73

Principal remaining after 3 years

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 541.73*((1-(1+ 3.2/1200)^(-2*12))/(3.2/1200))

PV = 12577.97